Carriers unite for wider market access
Global operators press Asian governments for an end to telecoms policies favouring domestic players
South China Morning Post
Wednesday, September 15, 2004
Ten global and regional telephone companies have formed a coalition to press Asian governments for greater access to national telecommunications markets.
The Asia-Pacific Carriers Coalition is particularly targeting the policies of China and India that limit foreign participation in favour of domestic players. It says the restrictions are keeping prices unnecessarily high.
“Incumbent carriers in Asia typically remain dominant in their markets, with ubiquitous networks deployed over many years as the monopoly provider of all communication services,” coalition president Joe Welch said.
Mr Welch, who is MCI Asia-Pacific’s regional director of regulatory affairs, said key Asian markets remained rigged in favour of dominant carriers despite governments allowing new market players to develop.
“Relatively recent liberalisation in the main has not yet resulted in markets that are competitive, or that provide access to [last-mile connections] that are unrestricted or reasonably priced,” he said. Carriers such as AT&T, BT, Cable & Wireless, T-Systems (a division of Deutsche Telekom), Macquarie Corporate, MCI, Pacific Internet and StarHub are among those in the coalition.
Asian countries are generally in the early stages of liberalisation and have explicitly limited foreign operators’ direct market access to sectors that threatens incumbents’ core revenues, such as home line rentals or backbone call and data traffic.
The group is seeking to offer one-stop-shop services to multinational companies that are moving their operations to Asia. However, they must typically rely on incumbent carriers to provide last-mile access to users due to restrictions on ownership or wholesale leasing to foreign operators.
The coalition says last-mile access can often cost up to 60 per cent of service delivery. Matt Healy, Macquarie Corporate’s national regulatory manager, said Asian economies would benefit from more competitive markets even at the expense of national operators’ earnings.
“Yes, opening markets does take profit away from incumbent carriers, but it will unlock the value that should be in the hands of consumers,” Mr Healy said.
China limits foreign carriers’ participation in its telecommunications market but – under its World Trade Organisation commitments – it must progressively increase the stakes that foreign players can hold in domestic operators.
Beijing has pursued an aggressive policy of domestic liberalisation that has resulted in strong price competition, particularly in the mobile sector.
“Excessive profits made by incumbent carriers ultimately stem from excessive prices consumers pay for telecoms services. Conversely, removing excessive charges results in lower charges for customers and, in turn, may accelerate the growth of the economy,” the lobby group said.